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J & B, Inc. has $5 million of debt outstanding with a coupon rate of 12 percent. Currently the yield to maturity on these bonds

J & B, Inc. has $5 million of debt outstanding with a coupon rate of 12 percent. Currently the yield to maturity on these bonds is 14 percent. If the firm's tax rate is 40 percent, what is cost of debt to J & B?

	1.	14.0 percent
	2.	8.4 percent
	3.	12.0 percent
	4.	7.2 percent

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